Credit card fees could be passed from merchant to customer

Merchants will soon be able to pass along some or all of their credit card processing fees to customers, but the head of the state's retail merchants association doubts many will choose to do so.

The old rules that governed credit card transactions prohibited merchants from adding the so-called "swipe fee," ranging from 1.5 to 3 percent of a purchase, to the customer's bill. But a class action lawsuit that pitted millions of retailers against nine major banks, Visa and MasterCard, changes those rules across the country - except in 10 states that have passed legislation prohibiting swipe fees, including Maine, Massachusetts and Connecticut.

New Hampshire has no such prohibition, so consumers in the Granite State will have to be on the lookout for the prominent notices that merchants are required to post if they intend to add the charge to credit card transactions. Debit card transactions are not affected.

Nancy Kyle, president of the Retail Merchants Association of New Hampshire, said she doubted the practice would become widespread in a state that relies so heavily on retail sales.

"I think you are going to see retailers being very hesitant to pass costs along to their customers," she said.

The official position of the RMANH is that "retailers should be free to determine the pricing of their products, including taking into account payment type, and free to determine what payment options to accept."

The settlement between the merchants, credit card companies and banks that were party to the lawsuit was reached in July and approved by a U.S. District Court Judge in November for implementation in 2013.

Visa, MasterCard and the nation's biggest banks agreed to pay $7.3 billion to millions of merchants to settle the antitrust lawsuit filed in 2005 over swipe fees and other practices by the credit card companies.

But the retail industry is far from united on the issue. The National Retail Federation opposes the settlement, calling it a "one-sided deal" that "benefits no one but lawyers and credit card companies, and should not be forced on the retail industry or its customers."

Retailers not party to the suit would still be bound by the settlement, which prohibits any future lawsuits against the banks or credit card companies surrounding anti-trust practices or fees.

"NRF opposes the settlement because it fails to reform the cartel-like system in which Visa and MasterCard set a rigid schedule of swipe fees that all banks follow," said NRF General Counsel Mallory Duncan.

The consumer advocacy group, Consumer Action, has launched a website, www.knowyourcard.org, to help consumers understand the changes. It points out that retailers must limit fees to what they pay to accept a credit card, typically between 1.5 percent and 3 percent of the total purchase.

In addition, retailers must post signs regarding any checkout fees, and must disclose on the customer receipt the amount of the fee, the fact that the retailer is imposing the charge and that the fee is not greater than what it costs the retailer to accept charge cards.

"Checkout fees can vary for different kinds of cards, such as rewards cards or premier cards, so be sure to ask your retailer in advance if different surcharges apply and choose your payment card accordingly," said Linda Sherry of Consumer Action.